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Empowering homeowners key to Residential Solutions’ success

DAVIDSON, NC (INGERSOLL RAND NEWS SERVICE) -- Connecting and
partnering with homeowners across North America in innovative ways is
the mission of the Residential Solutions Sector. By combining
Ingersoll Rand’s residential heating, ventilation and air conditioning
(HVAC) business and residential security business to form the new
sector, our leadership team and employees have the “freedom and
opportunity to think about how to set ourselves up as the consumers’
partner, the homeowners’ partner, and deliver safety, comfort and
efficiency,” said Residential Solutions President Steve Hochhauser.

“It’s been an incredible journey,” he continued. “We’re excited
about the opportunity and the future. It’s just been wonderful to see
more and more of our engineers and our people spending more and more
of their time with consumers, homeowners, customers and partners to
create this winning opportunity together.”

Residential Solutions is resonating with consumers because it is
focusing on understanding the way they want to manage their
lives:

- Working moms want to know when their kids are home from school -
Mobile professionals want the ability to control their homes’ locks,
temperature and lighting while on the road - Homeowners want new
technology to monitor second homes and for elder care

Building a successful business goes beyond strong distribution,
brands and products for every price point. ”Our mission isn’t simply
about HVAC and locks, it’s about providing a superior experience for
consumers,” said Hochhauser.

Market driversIn residential HVAC, the replacement
market is rebounding faster than new construction. “We expect to see
the market come back,” said Hochhauser, “and once again approach
double-digit growth.”

He also noted a trend toward higher efficiency ratings: In 2000,
only two percent of products were 14 SEER (Seasonal Energy Efficiency
Rate) and above. By 2009, the percentage soared to 26 percent, and it
is projected to be 35 percent by 2012.

Residential Solutions is working to promote energy efficiency with
energy advocacy groups and influencing legislation, such as U.S.
Senator Jeff Bingaman’s proposal to create the first-ever National
Renewable Energy Standard.

Similarly, the residential security market is tied to housing
dynamics and is trending up, with two times more spending in existing
home sales than renovations. “This is a nice dynamic,” said
Hochhauser. “The retail segment is strengthening, and we’ll see a good
bump as the year progresses.”

Innovation, productivity and cash generationDiscussing
innovation, Hochhauser noted how the Residential Solutions team took a
fresh look at its HVAC product line, even tearing down the opening
price point 13 SEER unit to learn how to build it simpler while still
maintaining the reliability for which Trane is known. The result is a
unit that’s 50-percent smaller, easier to manufacture and less
expensive. “This exercise helps us deliver the Trane value proposition
at every step,” said Hochhauser. “It helps us keep the Trane customer
for life.”

Another exciting area of innovation for the business is entering the
emerging $5-billion home automation market. “Consumers have an
increasing desire to manage their homes and the things that are
important to them,” said Hochhauser. “And we’re creating the
capability to do that with our Schlage LiNK.” This award-winning
product line enables users to remotely control their home’s locks,
thermostat, lighting and security video cameras.

Value analysis/value engineering is driving improvements to the
bottom line and improving the margin base of the business. “The copper
to aluminum transformation is one that we’ve been at for a while on
the residential HVAC side of this business,” said Hochhauser. “We just
completed another piece of it that’ll save us $2 million this year.”
The switch provides a double benefit: weight and material cost
reductions. “It’s two great savings,” said Hochhauser. “It’s two nice
ways to win.”

In the area of cash management, he reported that, “we’ve tripled
inventory turns in this business and we took our gap from receivables
to payables from 12 days to two.”

- The Richmond team leveraged a strong relationship Schlage had with
a builder to convert 1,200 houses to Trane air conditioning units. -
Apple iPhone commercials highlight the wireless technology that lets
homeowners lock doors and check lights in their homes, all made
possible by Schlage LiNK. - On a recent visit to China, a sales
and marketing team put aside PowerPoint slides and instead visited
with local consumers, to live their lives for a day. - Dealer
partners are given more than 350,000 leads a year, “which is an
incredible differentiator between us and any of our competitors” said
Hochhauser. “We turn business over to our dealers each and every day.”

The best is yet to come“When we put this division
together,” said Hochhauser, “we had two great businesses: Schlage
residential on the lock side and Trane on the HVAC side. But putting
these businesses together really wasn’t about locks and HVAC, it was
about connecting with the consumer in the things they care about most,
safety, comfort and efficiency – and finding ways to provide that to
them in the ways they want it provided to them. And we’re taking that
to a new level when they are home and when they are away. We want to
create the opportunity for our customers to stay with us as lifelong
customers and partners. And that’s why we are completing our product
line to offer our products at every major point in every segment.

“It’s been an exciting first year in this business,” concluded
Hochhauser. “But the best is really yet to come. We’ve got some great
innovation. We’ve got a strong business model, trusted brands and
improving market dynamics with some wind behind our back for a change.
We are winning with channel partnership, leadership and innovation and
making it happen through productivity and cash generation.”

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